[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 129 Enrolled Bill (ENR)]

        S.129

                       One Hundred Eighth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
           the twentieth day of January, two thousand and four


                                 An Act


 
  To provide for reform relating to Federal employment, and for other 
                                purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Federal Workforce 
Flexibility Act of 2004''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:
Sec. 1. Short title; table of contents.

      TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

Sec. 101. Recruitment, relocation, and retention bonuses.
Sec. 102. Streamlined critical pay authority.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS

Sec. 201. Agency training.
Sec. 202. Annual leave enhancements.
Sec. 203. Compensatory time off for travel.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

Sec. 301. Corrections relating to pay administration.
Sec. 302. Technical corrections.

     TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

    SEC. 101. RECRUITMENT, RELOCATION, AND RETENTION BONUSES.
    (a) Bonuses.--
        (1) In general.--Chapter 57 of title 5, United States Code, is 
    amended by striking sections 5753 and 5754 and inserting the 
    following:

``Sec. 5753. Recruitment and relocation bonuses

    ``(a)(1) This section may be applied to--
        ``(A) employees covered by the General Schedule pay system 
    established under subchapter III of chapter 53; and
        ``(B) employees in a category approved by the Office of 
    Personnel Management at the request of the head of an Executive 
    agency.
    ``(2) A bonus may not be paid under this section to an individual 
who is appointed to or who holds--
        ``(A) a position to which an individual is appointed by the 
    President, by and with the advice and consent of the Senate;
        ``(B) a position in the Senior Executive Service as a noncareer 
    appointee (as such term is defined under section 3132(a)); or
        ``(C) a position which has been excepted from the competitive 
    service by reason of its confidential, policy-determining, policy-
    making, or policy-advocating character.
    ``(3) In this section, the term `employee' has the meaning given 
that term in section 2105, except that such term also includes an 
employee described in subsection (c) of that section.
    ``(b) The Office of Personnel Management may authorize the head of 
an agency to pay a bonus under this section to an individual only if--
        ``(1) the position to which such individual is appointed (as 
    described in paragraph (2)(A)) or to which such individual moves or 
    must relocate (as described in paragraph (2)(B)) is likely to be 
    difficult to fill in the absence of such a bonus; and
        ``(2) the individual--
            ``(A) is newly appointed as an employee of the Federal 
        Government; or
            ``(B)(i) is currently employed by the Federal Government; 
        and
            ``(ii)(I) moves to a new position in the same geographic 
        area under circumstances described in regulations of the 
        Office; or
            ``(II) must relocate to accept a position in a different 
        geographic area.
    ``(c)(1) Payment of a bonus under this section shall be contingent 
upon the employee entering into a written service agreement to complete 
a period of employment with the agency, not longer than 4 years. The 
Office may, by regulation, prescribe a minimum service period for 
purposes of this section.
    ``(2)(A) The agreement shall include--
        ``(i) the commencement and termination dates of the required 
    service period (or provisions for the determination thereof);
        ``(ii) the amount of the bonus;
        ``(iii) the method of payment; and
        ``(iv) other terms and conditions under which the bonus is 
    payable, subject to the requirements of this section and 
    regulations of the Office.
    ``(B) The terms and conditions for paying a bonus, as specified in 
the service agreement, shall include--
        ``(i) the conditions under which the agreement may be 
    terminated before the agreed-upon service period has been 
    completed; and
        ``(ii) the effect of the termination.
    ``(C) The required service period shall commence upon the 
commencement of service with the agency or movement to a new position 
or geographic area, as applicable, unless the service agreement 
provides for a later commencement date in circumstances and to the 
extent allowable under regulations of the Office, such as when there is 
an initial period of formal basic training.
    ``(d)(1) Except as provided in subsection (e), a bonus under this 
section shall not exceed 25 percent of the annual rate of basic pay of 
the employee at the beginning of the service period multiplied by the 
number of years (including a fractional part of a year, as determined 
under regulations of the Office) in the required service period of the 
employee involved.
    ``(2) A bonus under this section may be paid as an initial lump 
sum, in installments, as a final lump sum upon the completion of the 
full period of service required by the agreement, or in a combination 
of these forms of payment.
    ``(3) A bonus under this section is not part of the basic pay of an 
employee for any purpose.
    ``(4) Under regulations of the Office, a recruitment bonus under 
this section may be paid to an eligible individual before that 
individual enters on duty.
    ``(e) The Office may authorize the head of an agency to waive the 
limitation under subsection (d)(1) based on a critical agency need, 
subject to regulations prescribed by the Office. Under such a waiver, 
the maximum bonus allowable shall--
        ``(1) be equal to the maximum that would be determined if 
    subsection (d)(1) were applied by substituting `50' for `25'; but
        ``(2) in no event exceed 100 percent of the annual rate of 
    basic pay of the employee at the beginning of the service period.
Nothing in this subsection shall be considered to permit the waiver of 
any requirement under subsection (c).
    ``(f) The Office shall require that an agency establish a plan for 
the payment of recruitment bonuses before paying any such bonuses, and 
a plan for the payment of relocation bonuses before paying any such 
bonuses, subject to regulations prescribed by the Office.
    ``(g) The Office may prescribe regulations to carry out this 
section, including regulations relating to the repayment of a bonus 
under this section in appropriate circumstances when the agreed-upon 
service period has not been completed.

``Sec. 5754. Retention bonuses

    ``(a)(1) This section may be applied to--
        ``(A) employees covered by the General Schedule pay system 
    established under subchapter III of chapter 53; and
        ``(B) employees in a category approved by the Office of 
    Personnel Management at the request of the head of an Executive 
    agency.
    ``(2) A bonus may not be paid under this section to an individual 
who is appointed to or who holds--
        ``(A) a position to which an individual is appointed by the 
    President, by and with the advice and consent of the Senate;
        ``(B) a position in the Senior Executive Service as a noncareer 
    appointee (as such term is defined under section 3132(a)); or
        ``(C) a position which has been excepted from the competitive 
    service by reason of its confidential, policy-determining, policy-
    making, or policy-advocating character.
    ``(3) In this section, the term `employee' has the meaning given 
that term in section 2105, except that such term also includes an 
employee described in subsection (c) of that section.
    ``(b) The Office of Personnel Management may authorize the head of 
an agency to pay a retention bonus to an employee if--
        ``(1) the unusually high or unique qualifications of the 
    employee or a special need of the agency for the employee's 
    services makes it essential to retain the employee; and
        ``(2) the agency determines that, in the absence of a retention 
    bonus, the employee would be likely to leave--
            ``(A) the Federal service; or
            ``(B) for a different position in the Federal service under 
        conditions described in regulations of the Office.
    ``(c) The Office may authorize the head of an agency to pay 
retention bonuses to a group of employees in 1 or more categories of 
positions in 1 or more geographic areas, subject to the requirements of 
subsection (b)(1) and regulations prescribed by the Office, if there is 
a high risk that a significant portion of employees in the group would 
be likely to leave in the absence of retention bonuses.
    ``(d)(1) Payment of a retention bonus is contingent upon the 
employee entering into a written service agreement with the agency to 
complete a period of employment with the agency.
    ``(2)(A) The agreement shall include--
        ``(i) the length of the required service period;
        ``(ii) the amount of the bonus;
        ``(iii) the method of payment; and
        ``(iv) other terms and conditions under which the bonus is 
    payable, subject to the requirements of this section and 
    regulations of the Office.
    ``(B) The terms and conditions for paying a bonus, as specified in 
the service agreement, shall include--
        ``(i) the conditions under which the agreement may be 
    terminated before the agreed-upon service period has been 
    completed; and
        ``(ii) the effect of the termination.
    ``(3)(A) Notwithstanding paragraph (1), a written service agreement 
is not required if the agency pays a retention bonus in biweekly 
installments and sets the installment payment at the full bonus 
percentage rate established for the employee with no portion of the 
bonus deferred.
    ``(B) If an agency pays a retention bonus in accordance with 
subparagraph (A) and makes a determination to terminate the payments, 
the agency shall provide written notice to the employee of that 
determination. Except as provided in regulations of the Office, the 
employee shall continue to be paid the retention bonus through the end 
of the pay period in which such written notice is provided.
    ``(4) A retention bonus for an employee may not be based on any 
period of such service which is the basis for a recruitment or 
relocation bonus under section 5753.
    ``(e)(1) Except as provided in subsection (f), a retention bonus, 
which shall be stated as a percentage of the employee's basic pay for 
the service period associated with the bonus, may not exceed--
        ``(A) 25 percent of the employee's basic pay if paid under 
    subsection (b); or
        ``(B) 10 percent of an employee's basic pay if paid under 
    subsection (c).
    ``(2)(A) A retention bonus may be paid to an employee in 
installments after completion of specified periods of service or in a 
single lump sum at the end of the full period of service required by 
the agreement.
    ``(B) An installment payment is derived by multiplying the amount 
of basic pay earned in the installment period by a percentage not to 
exceed the bonus percentage rate established for the employee.
    ``(C) If the installment payment percentage established for the 
employee is less than the bonus percentage rate established for the 
employee, the accrued but unpaid portion of the bonus is payable as 
part of the final installment payment to the employee after completion 
of the full service period under the terms of the service agreement.
    ``(D) For purposes of this paragraph, the bonus percentage rate 
established for an employee means the bonus percentage rate established 
for such employee in accordance with paragraph (1) or subsection (f), 
as the case may be.
    ``(3) A retention bonus is not part of the basic pay of an employee 
for any purpose.
    ``(f) Upon the request of the head of an agency, the Office may 
waive the limit established under subsection (e)(1) and permit the 
agency head to pay an otherwise eligible employee or category of 
employees retention bonuses of up to 50 percent of basic pay, based on 
a critical agency need.
    ``(g) The Office shall require that, before paying any bonuses 
under this section, an agency shall establish a plan for the payment of 
any such bonuses, subject to regulations prescribed by the Office.
    ``(h) The Office may prescribe regulations to carry out this 
section.''.
        (2) Clerical amendment.--The table of sections for chapter 57 
    of title 5, United States Code, is amended by striking the item 
    relating to section 5754 and inserting the following:
``5754. Retention bonuses.''.
        (3) Sense of congress.--It is the sense of the Congress that 
    the Director of the Office of Personnel Management--
            (A) should, each time a bonus is paid under the amendment 
        made by paragraph (1) to recruit or relocate a Federal employee 
        from one Government agency to another within the same 
        geographic area or to retain a Federal employee who might 
        otherwise leave one Government agency for another within the 
        same geographic area, be notified of that payment within 60 
        days after the date on which such bonus is paid; and
            (B) should monitor the payment of such bonuses (in the 
        circumstances described in subparagraph (A)) to ensure that 
        they are an effective use of the Federal Government's funds and 
        have not adversely affected the ability of those Government 
        agencies that lost employees to other Government agencies (in 
        such circumstances) to carry out their mission.
    (b) Relocation Payments.--Section 407 of the Federal Employees Pay 
Comparability Act of 1990 (5 U.S.C. 5305 note; 104 Stat. 1467) is 
repealed.
    (c) Reports.--
        (1) Recruitment and relocation bonuses.--
            (A) In general.--The Office of Personnel Management shall 
        submit to the Committee on Governmental Affairs of the Senate 
        and the Committee on Government Reform of the House of 
        Representatives annually, for each of the first 5 years during 
        which section 5753 of title 5, United States Code (as amended 
        by subsection (a)(1)) is in effect, a report on the operation 
        of such section.
            (B) Contents.--Each report submitted under this paragraph 
        shall include, with respect to the period covered by such 
        report, a description of how the authority to pay bonuses under 
        the section of title 5, United States Code, referred to in 
        subparagraph (A) was used by the respective agencies, 
        including, with respect to each such agency and each type of 
        bonus under such section--
                (i) the number and dollar-amount of bonuses paid--

                    (I) to individuals holding positions within each 
                pay grade, pay level, or other pay classification; and
                    (II) if applicable, to individuals who moved 
                between positions that were in different agencies but 
                the same geographic area (including the names of the 
                agencies involved); and

                (ii) a determination of the extent to which such 
            bonuses furthered the purposes of such section.
        (2) Retention bonuses.--
            (A) In general.--The Office of Personnel Management shall 
        submit to the Committee on Governmental Affairs of the Senate 
        and the Committee on Government Reform of the House of 
        Representatives annually, for each of the first 5 years during 
        which section 5754 of title 5, United States Code (as amended 
        by subsection (a)(1)) is in effect, a report on the operation 
        of such section.
            (B) Contents.--Each report submitted under this paragraph 
        shall include, with respect to the period covered by such 
        report, a description of how the authority to pay bonuses under 
        the section of title 5, United States Code, referred to in 
        subparagraph (A) was used by the respective agencies, 
        including, with respect to each such agency--
                (i) the number and dollar-amount of bonuses paid--

                    (I) to individuals holding positions within each 
                pay grade, pay level, or other pay classification; and
                    (II) if applicable, to prevent individuals from 
                moving between positions that were in different 
                agencies but the same geographic area (including the 
                names of the agencies involved); and

                (ii) a determination of the extent to which such 
            bonuses furthered the purposes of such section.
    (d) Effective Date and Application.--
        (1) Effective date.--Except as provided under paragraphs (2) 
    and (3), this section shall take effect on the first day of the 
    first applicable pay period beginning on or after the 180th day 
    after the date of the enactment of this Act.
        (2) Application to agreements.--A recruitment or relocation 
    bonus service agreement that was authorized under section 5753 of 
    title 5, United States Code, before the effective date under 
    paragraph (1) shall continue, until its expiration, to be subject 
    to such section as in effect on the day before such effective date.
        (3) Application to allowances.--Payment of a retention 
    allowance that was authorized under section 5754 of title 5, United 
    States Code, before the effective date under paragraph (1) shall 
    continue, subject to such section as in effect on the day before 
    such effective date, until the retention allowance is reauthorized 
    or terminated (but no longer than 1 year after such effective 
    date).
    SEC. 102. STREAMLINED CRITICAL PAY AUTHORITY.
    Section 5377 of title 5, United States Code, is amended--
        (1) by striking ``Office of Personnel Management'' each place 
    it appears and inserting ``Office of Management and Budget'';
        (2) by striking ``Office of Management and Budget'' each place 
    it appears and inserting ``Office of Personnel Management'';
        (3) in subsection (g), by striking ``prescribing regulations 
    under this section or''; and
        (4) in subsection (h), by striking ``Committee on Post Office 
    and Civil Service'' and inserting ``Committee on Government 
    Reform''.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS

SEC. 201. AGENCY TRAINING.

    (a) Training To Accomplish Performance Plans and Strategic Goals.--
Section 4103 of title 5, United States Code, is amended by adding at 
the end the following:
    ``(c) The head of each agency shall, on a regular basis--
        ``(1) evaluate each program or plan established, operated, or 
    maintained under subsection (a) with respect to accomplishing 
    specific performance plans and strategic goals in performing the 
    agency mission; and
        ``(2) modify such program or plan as needed to accomplish such 
    plans and goals.''.
    (b) Specific Training Programs.--
        (1) In general.--Chapter 41 of title 5, United States Code, is 
    amended by adding after section 4120 the following:

``Sec. 4121. Specific training programs

    ``In consultation with the Office of Personnel Management, the head 
of each agency shall establish--
        ``(1) a comprehensive management succession program to provide 
    training to employees to develop managers for the agency; and
        ``(2) a program to provide training to managers on actions, 
    options, and strategies a manager may use in--
            ``(A) relating to employees with unacceptable performance;
            ``(B) mentoring employees and improving employee 
        performance and productivity; and
            ``(C) conducting employee performance appraisals.''.
        (2) Clerical amendment.--The table of sections for chapter 41 
    of title 5, United States Code, is amended by adding at the end the 
    following:
``4121. Specific training programs.''.

SEC. 202. ANNUAL LEAVE ENHANCEMENTS.

    (a) Creditability of Prior Nongovernmental Service for Purposes of 
Determining Rate of Leave Accrual.--
        (1) In general.--Section 6303 of title 5, United States Code, 
    is amended by adding at the end the following:
    ``(e)(1) Not later than 180 days after the date of the enactment of 
this subsection, the Office of Personnel Management shall prescribe 
regulations under which, for purposes of determining years of service 
under subsection (a), credit shall, in the case of a newly appointed 
employee, be given for any prior service of such employee that would 
not otherwise be creditable for such purposes, if--
        ``(A) such service--
                ``(i) was performed in a position the duties of which 
            directly relate to the duties of the position to which such 
            employee is so appointed; and
                ``(ii) meets such other requirements as the Office may 
            prescribe; and
        ``(B) in the judgment of the head of the appointing agency, the 
    application of this subsection is necessary in order to achieve an 
    important agency mission or performance goal.
    ``(2) Service described in paragraph (1)--
        ``(A) shall be creditable, for the purposes described in 
    paragraph (1), as of the effective date of the employee's 
    appointment; and
        ``(B) shall not thereafter cease to be so creditable, unless 
    the employee fails to complete a full year of continuous service 
    with the agency.
    ``(3) An employee shall not be eligible for the application of 
paragraph (1) on the basis of any appointment if, within 90 days before 
the effective date of such appointment, such employee has held any 
position in the civil service.''.
        (2) Conforming amendment.--The second sentence of section 
    6303(a) of title 5, United States Code, is amended by striking the 
    period and inserting ``, and for all service which is creditable by 
    virtue of subsection (e).''.
    (b) Other Annual Leave Enhancements.--Section 6303 of title 5, 
United States Code, is amended by adding after subsection (e) (as added 
by subsection (a)) the following:
    ``(f) Notwithstanding any other provision of this section, the rate 
of accrual of annual leave under subsection (a) shall be 1 day for each 
full biweekly pay period in the case of any employee who holds a 
position which is subject to--
        ``(1) section 5376 or 5383; or
        ``(2) a pay system equivalent to either of the foregoing, as 
    determined by the Office of Personnel Management.''.
    (c) Applicability.--None of the amendments made by subsection (a) 
shall apply in the case of any employee holding a position pursuant to 
an appointment made before the effective date of the regulations 
implementing such amendments.
    SEC. 203. COMPENSATORY TIME OFF FOR TRAVEL.
    (a) In General.--Subchapter V of chapter 55 of title 5, United 
States Code, is amended by adding at end the following:

``Sec. 5550b. Compensatory time off for travel

    ``(a) Notwithstanding section 5542(b)(2), each hour spent by an 
employee in travel status away from the official duty station of the 
employee, that is not otherwise compensable, shall be treated as an 
hour of work or employment for purposes of calculating compensatory 
time off.
    ``(b) An employee who has any hours treated as hours of work or 
employment for purposes of calculating compensatory time under 
subsection (a), shall not be entitled to payment for any such hours 
that are unused as compensatory time.''.
    (b) Clerical Amendment.--The table of sections for chapter 55 of 
title 5, United States Code, is amended by inserting after the item 
relating to section 5550a the following:
``5550b. Compensatory time off for travel.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the earlier of--
        (1) the effective date of any regulations prescribed to carry 
    out such amendments; or
        (2) the 90th day after the date of the enactment of this Act.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

    SEC. 301. CORRECTIONS RELATING TO PAY ADMINISTRATION.
    (a) In General.--Chapter 53 of title 5, United States Code, is 
amended--
        (1) in section 5302, by striking paragraph (8) and inserting 
    the following:
        ``(8) the term `rates of pay under the General Schedule', 
    `rates of pay for the General Schedule', or `scheduled rates of 
    basic pay' means the rates of basic pay under the General Schedule 
    as established by section 5332, excluding pay under section 5304 
    and any other additional pay of any kind; and'';
        (2) in section 5305--
            (A) by striking subsection (a) and inserting the following:
    ``(a)(1) Whenever the Office of Personnel Management finds that the 
Government's recruitment or retention efforts with respect to 1 or more 
occupations in 1 or more areas or locations are, or are likely to 
become, significantly handicapped due to any of the circumstances 
described in subsection (b), the Office may establish for the areas or 
locations involved, with respect to individuals in positions paid under 
any of the pay systems referred to in subsection (c), higher minimum 
rates of pay for 1 or more grades or levels, occupational groups, 
series, classes, or subdivisions thereof, and may make corresponding 
increases in all rates of the pay range for each such grade or level. 
However, a minimum rate so established may not exceed the maximum rate 
of basic pay (excluding any locality-based comparability payment under 
section 5304 or similar provision of law) for the grade or level by 
more than 30 percent, and no rate may be established under this section 
in excess of the rate of basic pay payable for level IV of the 
Executive Schedule. In the case of individuals not subject to the 
provisions of this title governing appointment in the competitive 
service, the President may designate another agency to authorize 
special rates under this section.
    ``(2) The head of an agency may determine that a category of 
employees of the agency will not be covered by a special rate 
authorization established under this section. The head of an agency 
shall provide written notice to the Office of Personnel Management (or 
other agency designated by the President to authorize special rates 
under the last sentence of paragraph (1)) which identifies the specific 
category or categories of employees that will not be covered by special 
rates authorized under this section. If the head of an agency removes a 
category of employees from coverage under a special rate authorization 
after that authorization takes effect, the loss of coverage will take 
effect on the first day of the first pay period after the date of the 
notice.'';
            (B) in subsection (b), by striking paragraph (4) and 
        inserting the following:
        ``(4) any other circumstances which the Office of Personnel 
    Management (or such other agency as the President may under the 
    last sentence of subsection (a)(1) designate) considers 
    appropriate.'';
            (C) in subsection (d)--
                (i) by striking ``President'' and inserting ``Office of 
            Personnel Management''; and
                (ii) by striking ``or by such agency as he may 
            designate'' and inserting ``(or by such other agency as the 
            President may designate under the last sentence of 
            subsection (a)(1))'';
            (D) in subsection (e), by striking ``basic pay'' and 
        inserting ``pay'';
            (E) by striking subsection (f) and inserting the following:
    ``(f) When a schedule of special rates established under this 
section is adjusted under subsection (d), a covered employee's special 
rate will be adjusted in accordance with conversion rules prescribed by 
the Office of Personnel Management (or by such other agency as the 
President may under the last sentence of subsection (a)(1) 
designate).'';
            (F) in subsection (g)(1)--
                (i) by striking ``basic pay'' and inserting ``pay''; 
            and
                (ii) by striking ``President (or his designated 
            agency)'' and inserting ``Office of Personnel Management 
            (or such other agency as the President may under the last 
            sentence of subsection (a)(1) designate)'';
            (G) by striking subsection (h) and inserting the following:
    ``(h) An employee shall not for any purpose be considered to be 
entitled to a rate of pay established under this section with respect 
to any period for which such employee is entitled to a higher rate of 
basic pay under any other provision of law. For purposes of this 
subsection, the term `basic pay' includes any applicable locality-based 
comparability payment under section 5304 or similar provision of 
law.''; and
            (H) by adding at the end the following:
    ``(i) If an employee who is receiving a rate of pay under this 
section becomes subject, by virtue of moving to a new official duty 
station, to a different pay schedule, such employee's new rate of pay 
shall be initially established under conversion rules prescribed by the 
Office of Personnel Management (or such other agency as the President 
may under the last sentence of subsection (a)(1) designate) in 
conformance with the following:
        ``(1) First, determine the rate of pay to which such employee 
    would be entitled at the new official duty station based on such 
    employee's position, grade, and step (or relative position in the 
    rate range) before the move.
        ``(2) Then, if (in addition to the change in pay schedule) the 
    move also involves any personnel action or other change requiring a 
    rate adjustment under any other provision of law, rule, or 
    regulation, apply the applicable rate adjustment provisions, 
    treating the rate determined under paragraph (1) as if it were the 
    rate last received by the employee before the rate adjustment.
    ``(j) A rate determined under a schedule of special rates 
established under this section shall be considered to be part of basic 
pay for purposes of subchapter III of chapter 83, chapter 84, chapter 
87, subchapter V of chapter 55, and section 5941, and for such other 
purposes as may be expressly provided for by law or as the Office of 
Personnel Management may by regulation prescribe.'';
        (3) in section 5334--
            (A) in subsection (b), by adding at the end the following:
``If an employee's rate after promotion or transfer is greater than the 
maximum rate of basic pay for the employee's grade, that rate shall be 
treated as a retained rate under section 5363. The Office of Personnel 
Management shall prescribe by regulation the circumstances under which 
and the extent to which special rates under section 5305 (or similar 
provision of law) or locality-adjusted rates under section 5304 (or 
similar provision of law) are considered to be basic pay in applying 
this subsection.''; and
            (B) by adding at the end the following:
    ``(g) In the case of an employee who--
        ``(1) moves to a new official duty station, and
        ``(2) by virtue of such move, becomes subject to a different 
    pay schedule,
any rate adjustment under the preceding provisions of this section, 
with respect to such employee in connection with such move, shall be 
made--
        ``(A) first, by determining the rate of pay to which such 
    employee would be entitled at the new official duty station based 
    on such employee's position, grade, and step (or relative position 
    in the rate range) before the move, and
        ``(B) then, by applying the provisions of this section that 
    would otherwise apply (if any), treating the rate determined under 
    subparagraph (A) as if it were the rate last received by the 
    employee before the rate adjustment.'';
        (4) in section 5361--
            (A) by amending paragraph (4) to read as follows:
        ``(4) `rate of basic pay' means--
            ``(A) the rate of basic pay payable to an employee under 
        law or regulations before any deductions or additions of any 
        kind, but including--
                ``(i) any applicable locality-based comparability 
            payment under section 5304 or similar provision of law;
                ``(ii) any applicable special pay under section 5305 or 
            similar provision of law; and
                ``(iii) subject to such regulations as the Office of 
            Personnel Management may prescribe, any applicable existing 
            retained rate of pay established under section 5363 or 
            similar provision of law; and
            ``(B) in the case of a prevailing rate employee, the 
        scheduled rate of pay determined under section 5343;'';
            (B) in paragraph (6), by striking ``and'' at the end;
            (C) in paragraph (7), by striking the period and inserting 
        ``; and''; and
            (D) by adding at the end the following:
        ``(8) `retained rate' means the rate of basic pay to which an 
    employee is entitled under section 5363(b)(2).'';
        (5) in section 5363--
            (A) in subsection (a), by striking the matter following 
        paragraph (4) and inserting the following:
``is entitled to a rate of basic pay in accordance with regulations 
prescribed by the Office of Personnel Management in conformity with the 
provisions of this section.''; and
            (B) by striking subsections (b) and (c) and inserting the 
        following:
    ``(b)(1)(A) If, as a result of any event described in subsection 
(a), the employee's former rate of basic pay is less than or equal to 
the maximum rate of basic pay payable for the grade of the employee's 
position immediately after the occurrence of the event involved, the 
employee is entitled to basic pay at the lowest rate of basic pay 
payable for such grade that equals or exceeds such former rate of basic 
pay.
    ``(B) This section shall cease to apply to an employee to whom 
subparagraph (A) applies once the appropriate rate of basic pay has 
been determined for such employee under this paragraph.
    ``(2)(A) If, as a result of any event described in subsection (a), 
the employee's former rate of basic pay is greater than the maximum 
rate of basic pay payable for the grade of the employee's position 
immediately after the occurrence of the event involved, the employee is 
entitled to basic pay at a rate equal to the lesser of--
        ``(i) the employee's former rate of basic pay; or
        ``(ii) 150 percent of the maximum rate of basic pay payable for 
    the grade of the employee's position immediately after the 
    occurrence of the event involved,
as adjusted by subparagraph (B).
    ``(B) A rate to which an employee is entitled under this paragraph 
shall be increased at the time of any increase in the maximum rate of 
basic pay payable for the grade of the employee's position by 50 
percent of the dollar amount of each such increase.
    ``(3) For purposes of this subsection, the term `former rate of 
basic pay', as used with respect to an employee in connection with an 
event described in subsection (a), means the rate of basic pay last 
received by such employee before the occurrence of such event.
    ``(c)(1) Notwithstanding any other provision of this section, in 
the case of an employee who--
        ``(A) moves to a new official duty station, and
        ``(B) in conjunction with such move, becomes subject to both a 
    different pay schedule and (disregarding this subsection) the 
    preceding provisions of this section,
this section shall be applied--
        ``(i) first, by determining the rate of pay to which such 
    employee would be entitled at the new official duty station based 
    on such employee's position, grade, and step (or relative position 
    in the pay range) before the move, and
        ``(ii) then, by applying the provisions of this section that 
    would apply (if any), treating the rate determined under clause (i) 
    as if it were the rate last received by the employee before the 
    application of this section.
    ``(2) A reduction in an employee's rate of basic pay resulting from 
a determination under paragraph (1)(ii) is not a basis for an 
entitlement under this section.
    ``(3) The rate of basic pay for an employee who is receiving a 
retained rate at the time of moving to a new official duty station at 
which different pay schedules apply shall be subject to regulations 
prescribed by the Office of Personnel Management consistent with the 
purposes of this section.
    ``(d) A retained rate shall be considered part of basic pay for 
purposes of this subchapter and for purposes of subchapter III of 
chapter 83, chapters 84 and 87, subchapter V of chapter 55, section 
5941, and for such other purposes as may be expressly provided for by 
law or as the Office of Personnel Management may by regulation 
prescribe. The Office shall, for any purpose other than any of the 
purposes referred to in the preceding sentence, prescribe by regulation 
what constitutes basic pay for employees receiving a retained rate.
    ``(e) This section shall not apply, or shall cease to apply, to an 
employee who--
        ``(1) has a break in service of 1 workday or more;
        ``(2) is entitled, by operation of this subchapter, chapter 51 
    or 53, or any other provision of law, to a rate of basic pay which 
    is equal to or higher than, or declines a reasonable offer of a 
    position the rate of basic pay for which is equal to or higher 
    than, the retained rate to which the employee would otherwise be 
    entitled; or
        ``(3) is demoted for personal cause or at the employee's 
    request.''; and
        (6) in section 5365(b), by inserting after ``provisions of this 
    subchapter'' the following: ``(subject to any conditions or 
    limitations the Office may establish)''.
    (b) Special Rates for Law Enforcement Officers.--Section 403(c) of 
the Federal Employees Pay Comparability Act of 1990 (5 U.S.C. 5305 
note) is amended by striking all after ``provision of law)'' and 
inserting ``and shall be basic pay for all purposes. The rates shall be 
adjusted at the time of adjustments in the General Schedule to maintain 
the step linkage set forth in subsection (b)(2).''.
    (c) Repeal.--Section 4505a(a)(2) of title 5, United States Code, is 
amended--
        (1) by striking ``(2)(A)'' and inserting ``(2)''; and
        (2) by striking subparagraph (B).
    (d) Effective Date; Conversion Rules.--
        (1) Effective date.--This section shall take effect on the 
    first day of the first applicable pay period beginning on or after 
    the 180th day after the date of the enactment of this Act.
        (2) Conversion rules.--
            (A) Individuals receiving a retained rate or a rate greater 
        than the maximum rate for the grade.--Subject to any 
        regulations the Office of Personnel Management may prescribe, 
        an employee under a covered pay schedule who, on the day before 
        the effective date of this section, is receiving a retained 
        rate under section 5363 of title 5, United States Code, or is 
        receiving under similar authority a rate of basic pay that is 
        greater than the maximum rate of basic pay payable for the 
        grade of the employee's position shall have that rate converted 
        as of the effective date of this section, and the employee 
        shall be considered to be receiving a retained rate under 
        section 5363 of such title (as amended by this section). The 
        newly applicable retained rate shall equal the formerly 
        applicable retained rate as adjusted to include any applicable 
        locality-based payment under section 5304 of title 5, United 
        States Code, or similar provision of law.
            (B) Definition.--For purposes of this paragraph, the term 
        ``covered pay schedule'' has the meaning given such term by 
        section 5361 of title 5, United States Code.

SEC. 302. TECHNICAL CORRECTIONS.

    (a)(1) Section 5304 of title 5, United States Code, as amended by 
section 1125 of the National Defense Authorization Act for Fiscal Year 
2004 (Public Law 108-136), is amended--
        (A) in subsection (g)(2)(A), by striking ``(A)-(D)'' and 
    inserting ``(A)-(C)''; and
        (B) in subsection (h)(2)(B)(i), by striking ``or (vii)'' and 
    inserting ``or (vi)''.
    (2) The amendments made by this subsection shall take effect as if 
included in the enactment of the National Defense Authorization Act for 
Fiscal Year 2004 (Public Law 108-136).
    (b) Section 5314 of title 5, United States Code, is amended by 
adding at the end the following:
        ``Administrator of the Office of Electronic Government.''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.